Buying a Car in Japan - Insurance, Registration, Taxes Etc.

We finally bought a car after living in Japan for almost a year.  We actually might have continued with public transportation, except we had two twin girls enter our lives.  That brought us to three kids and two parents, and riding the trains became much more difficult.

I'm not going to go into details here.  There are just a few simple points that I've been wanting to share that we learned in the process of shopping and buying a car.  If you want to send additional comments or questions, please use the email address below.  I will include any helpful information you want to send.

First of all, we bought a used car.  Common wisdom says that a new car loses a huge percentage of its value when it rolls off the car lot.  I think that's even more true in Japan.  The point is that a new car may give you a certain amount of security, but it's a terrible investment.  A used car offers much more value for what you spend.

Second, we realized that it's often better to buy from a dealer.  If you buy a used car from an individual in Japan, then you will find out that there is a lot of paperwork you'll need to complete and you won't get any kind of warranty.  Plus, in many cases, you can probably get a better deal from a dealer. That's because most of the individuals trying to sell their cars directly are foreigners. They don't want to sell their car to a dealer (because dealer's pay so little), so they're trying to get as much as they can for it by selling directly.  If you find the right dealer, though, they may actually have some better deals.  That's because they (the dealers) can buy cars so cheaply from Japanese owners who practically give their used cars away.  An exception is when you can buy a used car directly from a Japanese person, or anyone, who is willing to sell it to you at or near what the dealers are willing to pay.

Third, the price of used cars varies greatly depending on where the dealership is located.  Prices in Japan can by very local.  If the dealership is in an area with lots of wealthy people, the prices will be higher.  If you go out to a rural area, you'll find the same car would have a much lower price.

Fourth, we found that the used car dealers located right next to the Yokota US Air Force Base had much lower prices.  We're not a military family, but we learned this based on a tip from someone who lives there.  I assume that the used car prices are lower next to all the big US military bases.  That's because of two reasons: 1) the dealers are able to buy used cars from servicemen who are forced to sell everything in a hurry before shipping out, and 2) unlike the average Japanese buyer, US military personnel are searching aggressively for the best deal, so the used car dealers near military bases have to compete by offering the best prices.

Fifth, we appreciated the benefit of having the dealer handle all the paperwork and other requirements.  When you buy a car in Japan, you must pay various fees.  In addition to taxes, you must pay for insurance and a mandatory inspection (called "Sha'ken").  You should get additional insurance to adequately cover your liability in case of an accident.  Our dealer handled all of this, so after some faxing back and forth and about a week of waiting, we showed up with the money and picked up the car.  Our dealer came with very high recommendations, or we wouldn't have been so trusting.  In case you are interested, the name of the dealers is "Kelly's" and they are located next to Yokota Airforce Bases (and they speak English very well there).

Sixth, and last, "Sha'ken" (mentioned just above) must be paid every two years on older cars.  The amount of Sha'ken goes up depending on the size, engine size and age of the vehicle.  During the Sha'ken process certain repairs must be made, and it can get very expensive.  On the other hand, it helps insure that your vehicle is well maintained, so you're much less likely to have it breakdown in between.  However, the fact is that as cars get older, Sha'ken becomes more and more expensive.  Eventually, if the car stops running well or reaches a certain age (even though it's still a good car), you may have to pay a fee just to get rid of it.  This is the reason why there are so few older cars in Japan.  When cars hit about 60,000 kilometers (maybe 40,000 miles),  people start to get rid of them.  You'll find very few cars on the road with more than 100,000 kilometers (66,000 miles). Many of these used cars are shipped to other countries, like Australia and New Zealand, where people love the endless supply of cheap, slightly used cars from Japan.

Questions, Feedback, Comments

If you have a question, feedback or a comment, please send an email.  I hope some of you will take the time to write.  If so, I'll post selected questions and responses just below.  Send them to japan@globalcompassion.com .